On 1 December 2017, the Amended Construction Sector Charter was gazetted and came into effect. All measured entities within the Construction Sector have to comply with the Amended Construction Sector to verify their B-BBEE status.
For the purpose of this article, the focus will be on Supplier Development Programmes under the B-BBEE Amended Construction Code. The differentiation under the Supplier Development element between the Amended Codes of Good Practise and the Amended Construction Sector Codes is: that the emphasis is laid upon a Structured Supplier Development Programme for the Construction Code.
A Supplier Development Programme is a programme where the measured entity supplies a structured collaboration and assistance to Qualifying Beneficiary Entities in the form of Qualifying Supplier Development Contributions.
The first step for an entity in the Supplier Development Programme will be to identify a Qualifying Beneficiary Entity (Entities). The Qualifying Beneficiary Entity must meet the following conditions:
- The Measure Entity cannot hold more than 20% equity in the Qualifying Beneficiary Entity – the normal flow-through principle will be used for calculation purposes;
- The Qualifying Beneficiary Entity must employ a minimum of 3 permanent employees. This number will exclude the owners. The agency will scrutinise these criteria and look at the payroll and employment contracts for verification purposes;
- The Qualifying Beneficiary Entity must have a valid tax clearance certificate in place. No mention is made as to whether the Qualifying Beneficiary Entity must be registered with CIPC, so that a one-man business can qualify. As long as the business has a valid tax clearance certificate in place;
- The Qualifying Beneficiary Entity must have a valid B-BBEE, sworn affidavit or B-BBEE certificate in place. The affidavit or certificate must be valid when the parties enter into the agreement.
If all of this is in place, then the Supplier Development Programme must have the following in place:
- There must be a written agreement in place between the Measured Entity and the Qualifying Beneficiary Entity. In this written agreement, a “needs analysis” of the Qualifying Beneficiary Entity must be identified and documented;
- The written agreement must have a “Supplier Development Plan” of action. This written agreement must be signed by both parties involved;
- The written agreement plan must contain clear objectives for the development of at least 3 “needs analysis” from at least two areas that were identified for development;
- An Enterprise-Supplier Development Champion in the Measured Entity must be appointed. It must be someone at a Senior Management level or higher. The Champion will monitor progress made and complete a portfolio of evidence for verification purposes.
When planning and drafting a Supplier Development Programme for B-BBEE purposes, it is imperative that it is done right. It is crucial that businesses appoint a legal expert to help them plan and draft their Supplier Development Programmes.
Contact your SEESA BEE Legal Advisor to assist your business with planning and drafting your Supplier Development Programme for B-BBEE purposes. Alternatively, SMS the word “SEESA” to 45776 for an expert legal advisor to contact you.
About the Author
Nathan Marais started his career at SEESA in 2016 and is currently a BEE and Labour Legal Advisor at SEESA’s Kimberley branch. He is an admitted Advocate of the High Court of South Africa. He obtained his LLB degree from the University of the Free State in 2013 and completed the Law Society of South Africa’s practical legal training course thru UNISA in 2014.
- AMENDED CODE SERIES CSC000: FRAMEWORK FOR MEASURING BROAD-BASED BLACK ECONOMIC EMPOWERMENT IN THE CONSTRUCTION SECTOR STATEMENT CSC000: GENERAL PRINCIPLES AND THE LARGE ENTERPRISE SCORECARD – Issued under section 9(1) of the Broad-Based Black Economic Empowerment Act, of 2013 as amended – GOVERNMENT GAZETTE, 1 DECEMBER 2017